FA Sustainable Finance Forum: Top Five Takeaways

In terms of sustainable development goals (SDG), business and investment have long and difficult journeys ahead.  Sobering figures from a draft report published by the United Nations (UN) last month reveal that at the end of 2022, just 12% of the SDGs were on track to meet their 2030 targets.

“It’s time to sound the alarm,” the report warned.

“At the mid-way point on our way to 2030, the SDGs are in deep trouble. A preliminary assessment of the roughly 140 targets with data show only about 12% are on track.”

“Close to half, though showing progress, are moderately or severely off track and some 30% have either seen no movement or have regressed below the 2015 baseline.”

The audience at FinanceAsia’s recent Sustainable Finance Asia Forum on April 18 heard that although there is plenty of road to make up on the journey to net zero, so too is there substantial opportunity. 

ESG imperatives are changing the way institutional investors approach decision-making, develop sustainable products and operate within new regulatory frameworks.

While the over-arching message of the forum underlined that sustainable goals and driving yield are not inimical, how exactly institutions approach sustainable finance will shape the future.

The following are FA’s top five takeaways from a forum focussed on these frameworks.

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1. Creativity is key

While sufficient capital may be out there to bootstrap transitional finance in Asia – a region that is bearing the physical brunt of climate change – getting it where it needs to go in emerging markets (EMs) is not working at the scale and speed necessary to effect change.

Emily Woodland, head of sustainable and transition solutions for APAC at BlackRock, told a forum panel exploring the state of play of Asia’s SDG commitments that, as well as climate and transition risks, investors also face the common-or-garden risks that come from operating in EMs.

“There are the general risks of operating in these markets as well – that’s everything from legal, to political, to regulatory to currency considerations,” she said. 

“Where finance can help develop new approaches, is around alleviating risks to attract more private capital into these innovation markets, and this is where elements like blended finance come into play.”

To make emerging market projects bankable, de-risking tools are urgently needed.

“That means guarantees, insurance, first loss arrangements, technical assistance which can help bring these projects from being marginally bankable into the bankable space, offering the opportunity to set up a whole ecosystem in a particular market.”

2. Regulation drives change

As investment in sustainable development goals moves from the fringe to the mainstream, institutions are bringing with them experience and learnings that are accompanied by policy, regulation and clear frameworks from regional governments.

Institutions are being asked to lead mainstream investment in the space as increasingly, investment in ESG becomes a viable funding choice.

“The next phase, which is the forever phase, will be when sustainability becomes mandatory rather than just a choice,” Andrew Pidden, Global head of sustainable investments at DWS Group told the forum.

“In the future, you will not be able to make an investment that has not been subject to due diligence with a view to doing no harm – or at least to doing a lot less harm than it is going to supply.”

“People may think this is never going to happen, but people thought this phase (of ESG investment becoming mainstream) was never going to happen 10 or 15 years ago.”

3. China is an ESG bond behemoth

Make no mistake, China is an ESG debt giant. Assets in China’s ESG funds have doubled since 2021, lifted by Beijing’s growing emphasis on poverty alleviation, renewable power and energy security.

According to Zixiao (Alex) Cui, managing director CCX Green Finance International, in 2022, green bond issuance volume alone totalled about RMB 800 billion ($115.72 billion), marking a 44% increase year-on-year (YoY). In the first quarter of 2023, there were 113 green bond issuances worth almost RMB 20 billion.

“Actually, this number decreased compared to last year because right now in the mainland, the interest rate for lending loans from banks is very low so there’s really not much incentive to issue bonds,” he told the audience during a panel on the latest developments in Chinese ESG bonds and cross-border opportunities.

“But over the long term, I think we are on target to achieve a number no less than last year.”

At the heart of this momentum is China’s increasingly ESG positive regulation.

“Policy making is very critical because in the mainland, we have a top-down governance model mechanism which has proven effective in terms of scaling up the market – especially on the supply side.”

4. Greenwashing depends on your definition

When is greenwashing – the overstating of a company’s or product’s green credentials – technically measurable, and when is it a matter of opinion?

Gabriel Wilson-Otto, head of sustainable investing strategy at Fidelity International, told a panel addressing greenwashing and ESG hypocrisy issues, that these transparency and greenwashing concerns are often problems of definition.

“There is a bit of a disconnect between how these terms are used by different stakeholders in different scenarios,” he says.

On one side, is the argument around whether an organisation is doing what it says it is, which involves questions of transparency and taxonomy.

“In the other camp there’s the question of whether the organisation is doing what’s expected of it. And this is where it can get incredibly vague,” he explained.

Problems arise when interests and values begin to overlap.

“Should you, for instance, be investing in a tobacco company that’s aligned to a good decarbonisation objective? Should you pursue high ESG scores across the entire portfolio?” he queried.

“Depending on where you are in the world, you can get very different expectations from different stakeholders around what the answer to these sub-questions should be.”

5. Climate is overtaking compliance as a risk

While increased ESG regulation means that companies must take compliance more seriously, this is not the only driver. According to Penelope Shen, partner at  Stephenson Harwood, there is a growing understanding that climate risks are real.

“The rural economic forum global risk survey shows that the top three risks are all related to financial failure directly attributable to climate risk and bio-diversity loss,” she highlighted during a panel called ‘ESG as a component of investment DNA and beyond?’

“In fact, if you look at the top 10 risks, eight of them are climate related.”

The prominence of climate as a risk factor has consistently ranked top of the survey over the past 10 years, she explained.

“Other more socially related factors such as cost of living and erosion of social cohesion and societal polarisation are also risks that have consistently ranked highly,” she noted.

What’s your view on the outlook for green, social and sustainable debt in 2023? We invite investors and issuers across APAC to have your say in the 6th annual Sustainable Finance Poll by FinanceAsia and ANZ.

¬ Haymarket Media Limited. All rights reserved.

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Citi appoints new Malaysia CEO

Citi has appointed Vikram Singh as new CEO of its Malaysian business, effective from May.

A spokesperson for the bank told FinanceAsia that Singh had already relocated to Kuala Lumpur for the new role, which will see him prioritise growth across the market franchise.

In his new capacity, Singh reports to Amol Gupte, head of South Asia and the Asean region, and takes responsibility for the full suite of the bank’s activities in Malaysia. This includes oversight of the performance of Citi’s Solutions Centres in Kuala Lumpur and Penang, which support its wider banking operations in over fifty countries.

Singh has served across a number of Citi’s core divisions to date. He started his career with the bank 24 years ago working across its India-based business, in posts located in Mumbai, Bengaluru and New Delhi. Most recently, he was head of Asia Pacific Regional Account Management, managing coverage of global subsidiary clients operating in the region, from Singapore. 

A release shared with media pointed to Singh’s particular expertise leading the bank’s Corporate and Investment Banking effort in the Philippines over a period of five years, during which he devised robust business strategies that went on to achieve double-digit revenue growth.

“Vikram’s long career and experience with the firm will be invaluable in leading the next stage of growth in a market that also supports many of our global businesses and functions,” Gupte said in the announcement.

Citi established a presence in Malaysia 64 years ago. In January 2022, the bank announced plans to sell its consumer franchise in four Asean markets including Malaysia, to United Overseas Bank (UOB). The deal finalised in November 2022, bringing the bank regulatory capital benefits of approximately $1 billion. 

Offering an update on the bank’s performance in the market following the divestiture, the spokesperson told FA, “We continue to see good client activity across our institutional businesses.” He noted “good growth and client work”.

Elaborating on the current opportunities that Malaysia presents, the contact pointed to varied growth avenues across investment and corporate banking, as well as within the bank’s trade and treasury business, such as hedging.

“Across our institutional businesses from Banking, Markets and Services, we see opportunities to support both local and multinational corporate (MNC) clients further.”

The spokesperson added that the bank has recruitment plans around Singh’s appointment to support client-led growth. 

¬ Haymarket Media Limited. All rights reserved.

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Enter Australia in the laser weapon race

For those who aren’t gamers,” God mode” is a method of operation( or cheat ) included in some shoot-related games. You always run out of ammunition and are impervious to harm in God manner.

Of course, there is no God way in real life, but the military organizations around the world are very interested in weapons that resemble it, such as laser and additional” directed energy arms.” For instance, directed energy projects cost the US government close to$ 1 billion annually.

The argument is not unique to Australia. A directed power weapon system was required by the 2020 Force Structure Plan to be” capable of defeating armoured vehicles up to and including key battle tanks.”

The latest directed energy screening range for American business AIM Defence was introduced in March of this year on the fringes of Melbourne by Deputy Prime Minister Richard Marles. The Defense Science and Technology team announced a$ 13 million( US$ 8.6 million ) contract with European defence technology firm QinetiQ to create an initial protective light in April.

The new A$ 3.4 billion Advanced Strategic Capabilities Accelerator ( ASCA ) program places a high priority on directed energy technology.

Large quantities of electromagnetic energy are concentrated on a far-off goal by an energy tool that is directed. Light( a laser ) may be used to generate this energy, but microwaves or radio waves may also be employed.

We’ll focus on laser-based directed power weapons for the sake of conciseness, but the same can be said for other types of arms.

These arms may harm the sensitive digital systems that control devices and the people who use them, melt or burn stronger equipment, or both, depending on how much power is focused on the destination.

A black and white photo of a metal missile shell on a stand, appearing to explode.
In the 1980s, the US tested empirical light weapon systems. AP via The Conversation, a portrait

Magnetic waves are significantly faster than even the fastest conventional arms because they move at the speed of light.

Consider a hypersonic missile that is moving 10 kilometers off at ten years the speed of sound. By the time the directed light power from a high-power light reached the goal, it would have only moved in 10 meters.

Additionally, these arms never run out of ammunition because they project easy rather than weapons. Additionally, this implies that the weapon’s weapons does not need to be produced in a shop.

Directed power moves in a straight line because it is not affected by inertia like rockets and bullets. This makes target and aiming simpler and more trustworthy.

Additionally, directed energy arms have less chance of hitting near objects or sending debris flying because they cause problems by heating up a destination area.

Although directed energy arms have all these benefits over conventional weapons, it has proven challenging to construct good ones.

The enormous power needed to eradicate practical targets like missiles is one issue that laser weapons face. This dimension of object needs beams with hundreds of kilowatt or even megawatts of energy to be destroyed. We would need five years as much power to run these systems because they are only about 20 % appropriate.

Here, we are also into watt country, which is the amount of power a small city uses. Sometimes portable directed energy systems are enormous because of this.

Although devices with capacities up to 300kW have been developed, the US has just recently been able to produce a fairly low-power 50kW light small that is suitable for use on an armored vehicle.

A photo of an armoured vehicle
A 50kW light product mounted on an armoured vehicle is known as the US’s directed energy maneuver-short range air defense, or DE M-SHORAD. Jim Sheppard from the US Army via The Conversation

Additionally, the exquisite photonic equipment that produces the light very quickly needs to be freed of all that fire, or it will harm the light itself. Although laser technologies with more effective heat transfer have steadily increased the amount of light energy that can be effectively produced, this has proven to be challenging.

Dealing with for large amounts of energy also has the unintended consequence that any flaws in the visual techniques used to center and direct the light could easily harm the laser procedure catastrophically.

Additionally, it is difficult to direct a laser through atmospheric volatility, sand, or rain to an area the size of 10 cent pieces tens of kilometers away. The simple challenges become clear when you consider how challenging it is to maintain the energy in the same area on a fast-moving destination for tens of seconds.

Having said that, systems to get around all of these challenges are still being developed.

But let’s say that all of the specialized issues with directed power weapons are resolved. Even now, there will be vital infrastructure and supply chain challenges in order to manufacture them in large quantities.

There are businesses in Australia that have the knowledge to produce for gadgets. However, an industrial strength for the processing of the required laser diodes and high-quality optics, which does not occur in Australia, is required to develop and mass-produce directed energy weapons.

We will need to create such industries if we want to have” royal capability”— the ability to produce these weapons without relying on outside sources.

This is a costly and time-consuming invest in national network. In times of peace, it is relatively simple to obtain the basic materials for a directed energy weapon from abroad; however, in time of major conflict, nations that can produce these devices are likely to do so for their special needs.

Australia and many other nations will continue to be interested in developing directed energy arms due to their significant military benefits and the effects of an enemy possessing them.

However, as recent nuclear submarine policy decisions have demonstrated, it is not simple to quickly create an technological capability in technologies that our commercial base has up until now completely disregarded.

Sean O’Byrne is Associate Professor, Deputy Head of School (Research), School of Engineering and Information Technology, UNSW Canberra, UNSW Sydney

Under a Creative Commons license, this article is republished from The Conversation. read the article in its entirety.

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US Fed weighs mixed signals in next crucial rate call

Is the Federal Reserve finished raising interest rates now that inflation has decreased and the US market has cooled? After all, the central bank’s goal when it started jacking up prices more than a year later was to gradually lower the direction of prices without crashing the economy.

According to data released on April 27, 2023, the gross domestic product— the most comprehensive indicator of an economy’s output — expanded at a rate of just 1.1 % annually in the first quarter, down from 2.6 % during the last three months of 2022. Additionally, the most recent customer premium data from March indicates that inflation is slowing to 5 % annually, which is the lowest level in about a year.

However, the Fed hasn’t most finished raising rates just yet, which is bad news for consumers and businesses who are tired of skyrocketing borrowing costs. When the Fed meets for a two-day meet that ends May 3, 2023, commercial businesses are forecasting another quarter-point increase. Additionally, there might be additional changes in the future.

But this does bring up another crucial question: Is the Fed getting close to creating the” soft landing” it’s been hoping for with all the recent, frequently contradictory data and narratives about inflation, bank failures, and layoffs in the tech sector?

The market oscillates between zigzags.

The GDP facts offers some hints to the solution despite being a mixed bag.

Ultimately, the most recent GDP figures point to a good economic slowdown in the future, which is largely attributable to an increase in inventories, meaning that rather than ordering new goods, businesses are relying more on items that are already in storage.

Companies appear to be more likely to sell what is already available than to purchase different goods, probably in anticipation of a decline in consumption. Additionally, business investment fell 12.5 % during the quarter.

Consumer spending, which makes up about two-thirds of GDP, increased at a healthy 3.7 % rate at the same time that investment in machinery like computers and robotics increased by 11.2 %. However, this category is quite volatile and could easily change in the coming quarters.

A decline, such as a decrease in new purchases for manufactured goods, is also indicated by some data. This, along with the decrease in stock in the GDP report, may imply that companies are bracing themselves for a decline in consumer demand for goods and services.

Job openings have been declining when we consider the labor market, despite the fact that job growth has been strong( 334, 000 over the past six months ). According to the Bureau of Labor Statistics, holes decreased to about 9.9 million as of February 2022 from a peak of around 12 million.

Is the price of prices high or low?

We can also see opposing figures in terms of prices.

Since its peak in June 2022 at 9.1 %, the headline consumer price index has in fact been steadily declining. The Fed’s preferred solution of inflation, the primary preferred eating index, has nevertheless remained obstinately elevated.

The index, which excludes volatile food and energy prices, was up 4.6 % in March from a year earlier and has barely budged in months, according to the most recent data, released on April 28, 2023.

a grocery store in Washington, DC, selling fruits and vegetables. AFP portrait by Brendan Smialowski

However, wages increased at an annual 5.1 % in the first quarter, also in line with data released on April 28. Income, when rising, can have a significant upward thrust on price. Even though it’s down from its 5.7 % peak in the second quarter of 2022, wage growth is still moving at the fastest rate in at least 20 years.

More excursions are coming.

What does all of this mean for the Fed’s interest rate policy, then?

The market chances strongly favor another 0.25 amount stage increase, making it the 10th straight increase since March 2022, when the next meeting is scheduled to start on May 3.

The central bank is probably not finished raising rates because the inflation rate is still well above the Fed’s target of about 2 %, along with continued job growth and a low unemployment rate. I concur with the competition conflict pricing for a quarter-point increase for the meeting in May. Future content will direct any rate increases that come after that.

The good news is that, in my opinion, the higher price changes have historically occurred.

landing gently, or at least slowly

That brings us full circle to the crucial query: How near is the Fed to implementing a soft landing in which the US business is able to control inflation without erupting?

Unfortunately, it’s also soon to tell. Political and international functions, such as potential impasse on debt ceiling deals or further escalation of the Ukraine combat, you turn things upside down. Work businesses can be very unstable. Having said that, a development or mild recession is what we are anticipating.

What makes them different? A growth recession indicates a poor economy, but not enough to cause unemployment to rise drastically. This is preferable to an even mild recession that results in multiple quarterly GDP declines and significantly higher unemployment.

Simply put, we are unsure of which is more plausible. However, I believe that a severe downturn has been avoided, barring any fatal and unexpected events.

Christopher Decker, Professor of Economics, University of Nebraska Omaha

Under a Creative Commons license, this article is republished from The Conversation. Read the original publication.

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Welcome to the age of AI inequality

On November 30, 2022, OpenAI launched the AI chatbot ChatGTP, making the latest generation of AI technologies widely available.

In the few months since then, we have seen Italy ban ChatGTP over privacy concerns, leading technology luminaries calling for a pause on AI systems development, and even prominent researchers saying we should be prepared to launch airstrikes on data centers associated with rogue AI.

The rapid deployment of AI and its potential impacts on human society and economies is now clearly in the spotlight.

What will AI mean for productivity and economic growth? Will it usher in an age of automated luxury for all, or simply intensify existing inequalities? And what does it mean for the role of humans?

Economists have been studying these questions for many years. My colleague Yixiao Zhou and I surveyed their results in 2021, and found we are still a long way from definitive answers.

The big economic picture

Over the past half-century or so, workers around the world have been getting a smaller fraction of their country’s total income.

At the same time, growth in productivity – how much output can be produced with a given amount of inputs such as labor and materials – has slowed down. This period has also seen huge developments in the creation and implementation of information technologies and automation.

Better technology is supposed to increase productivity. The apparent failure of the computer revolution to deliver these gains is a puzzle economists call the Solow paradox.

Will AI rescue global productivity from its long slump? And if so, who will reap the gains? Many people are curious about these questions.

While consulting firms have often painted AI as an economic panacea, policymakers are more concerned about potential job losses. Economists, perhaps unsurprisingly, take a more cautious view.

Radical change at a rapid pace

Perhaps the single greatest source of caution is the huge uncertainty around the future trajectory of AI technology.

Compared to previous technological leaps – such as railways, motorized transport and, more recently, the gradual integration of computers into all aspects of our lives – AI can spread much faster. And it can do this with much lower capital investment.

This is because the application of AI is largely a revolution in software. Much of the infrastructure it requires, such as computing devices, networks and cloud services, is already in place.

There is no need for the slow process of building out a physical railway or broadband network – you can use ChatGPT and the rapidly proliferating horde of similar software right now from your phone.

A photo of a phone showing ChatGPT on the screen.
Unlike great technological innovations of the past, many AI tools will be instantly available to anyone with an internet connection. Photo: Shutterstock via The Conversation

It is also relatively cheap to make use of AI, which greatly decreases the barriers to entry. This links to another major uncertainty around AI: the scope and domain of the impacts.

AI seems likely to radically change the way we do things in many areas, from education and privacy to the structure of global trade. AI may not just change discrete elements of the economy but rather its broader structure.

Adequate modeling of such complex and radical change would be challenging in the extreme, and nobody has yet done it. Yet without such modeling, economists cannot provide clear statements about likely impacts on the economy overall.

More inequality, weaker institutions

Although economists have different opinions on the impact of AI, there is general agreement among economic studies that AI will increase inequality.

One possible example of this could be a further shift in the advantage from labor to capital, weakening labour institutions along the way. At the same time, it may also reduce tax bases, weakening the government’s capacity for redistribution.

Most empirical studies find that AI technology will not reduce overall employment. However, it is likely to reduce the relative amount of income going to low-skilled labor, which will increase inequality across society.

Moreover, AI-induced productivity growth would cause employment redistribution and trade restructuring, which would tend to further increase inequality both within countries and between them.

As a consequence, controlling the rate at which AI technology is adopted is likely to slow down the pace of societal and economic restructuring. This will provide a longer window for adjustment between relative losers and beneficiaries.

In the face of the rise of robotics and AI, there is a possibility for governments to alleviate income inequality and its negative impacts with policies that aim to reduce inequality of opportunity.

What’s left for humans?

The famous economist Jeffrey Sachs once said

What humans can do in the AI era is just to be human beings, because this is what robots or AI cannot do.

But what does that mean, exactly? At least in economic terms?

In traditional economic modeling, humans are often synonymous with “labor”, and also being an optimizing agent at the same time. If machines can not only perform labor, but also make decisions and even create ideas, what’s left for humans?

A close up photo of an eye with a bright white halo around the pupil.
What’s so special about humans? Economists are still working on that one. Photo: Arteum.ro / Unsplash via The Conversation

The rise of AI challenges economists to develop more complex representations of humans and the “economic agents” which inhabit their models.

As American economists David Parkes and Michael Wellman have noted, a world of AI agents may actually behave more like economic theory than the human world does.

Compared to humans, AIs “better respect idealized assumptions of rationality than people, interacting through novel rules and incentive systems quite distinct from those tailored for people.”

Importantly, having a better concept of what is “human” in economics should also help us think through what new characteristics AI will bring into an economy.

Will AI bring us some kind of fundamentally new production technology, or will it tinker with existing production technologies? Is AI simply a substitute for labor or human capital, or is it an independent economic agent in the economic system?

Answering these questions is vital for economists – and for understanding how the world will change in the coming years.

Yingying Lu is Research Associate, Center for Applied Macroeconomic Analysis, Crawford School of Public Policy, and Economic Modeller, CSIRO

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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What China gains as Ukraine peacemaker

After more than a year of no direct communication, the Chinese president, Xi Jinping, and Ukrainian president, Volodymyr Zelensky, had a phone conversation on April 26, 2023.

According to the Chinese record of the call, “the two sides exchanged views on China-Ukraine relations and the Ukraine crisis”, but globally it was seen as an attempt by Beijing to step in as peacemaker.

Meanwhile, Zelensky tweeted that he “had a long and meaningful phone call” with Xi, and later expanded on his Telegram channel saying that particular attention was “paid to the ways of possible cooperation to establish a just and sustainable peace for Ukraine”.

The most concrete outcome of the call is Xi’s confirmation that China will appoint a special representative on Eurasian affairs to Ukraine “to have in-depth communication with all parties on the political settlement of the Ukraine crisis.”

If nothing else, this signals that China is getting serious with its mediation efforts and judges the time to be right for this, not least because of increasing tensions in the Western alliance and doubts about the success of a Ukrainian counteroffensive.

China’s move is another indication of a changing international order that Beijing is keen, and increasingly able, to shape. What is immediately at stake for China is its relationship with the EU. For the EU’s member states, the war in Ukraine, including a possible further escalation, is of much more acute security concern than it is for China.

European officials have repeatedly urged Beijing to use its influence over Moscow to “bring Russia to its senses”, as French President Emmanuel Macron put it on his recent visit to China.

Other senior EU officials, from European Commission President Ursula von der Leyen to European Council President Charles Michel and the EU’s high representative for foreign affairs Josep Borrell have similarly left no doubt that China’s stance on the war in Ukraine will shape the future of EU-China relations. Given how important the EU and China are for each other economically, both sides have an interest in a stable and constructive relationship.

China-EU relations are, of course, part of a bigger picture of relations between China and the West. Yet even here, there are some signs of a possible opening. US treasury secretary Jane Yellen acknowledged that “negotiating the contours of engagement between great powers is difficult” but also noted that Beijing and Washington “can find a way forward if China is also willing to play its part.”

The Xi-Zelensky phone call fits into a careful and fragile choreography of moves that might gradually see a more effective management of the war in Ukraine that would, initially, prevent further escalation and eventually pave the way toward a settlement.

While it would not resolve all of the contentious issues in China-West relations, it would remove one particularly problematic issue from the list of immediate concerns.

A soldier returning fire in Bakhmut, Ukraine.
President Xi is now appointing a special envoy to Ukraine as part of moves from China to push forward peace talks. Photo: Reuters / Alamy via The Conversation

At the same time, China needs Russia as leverage in its great power competition with the West, and Xi is unlikely to abandon his partnership with Putin. But China also needs a Russia that is more controllable, and this means China needs an end to the war in Ukraine, which still has the potential to escalate further.

By reining in Russia over Ukraine, Xi can firmly establish China as an indispensable guarantor of sustainable security and stability in Europe.

Risks for the West

If the Chinese initiative is given the benefit of the doubt in Brussels and Washington and gains traction in Kyiv and Moscow, it gives Beijing a major opportunity to begin shaping a new Eurasian security order. While the West may be able and willing to contain the Kremlin militarily and isolate Russia economically, Xi will have a major role to play in managing Putin politically.

In other words, Beijing’s calculation may well be that for Europe to regain a measure of stability and security, China’s cooperation will be essential. This does not diminish the importance of the transatlantic security relationship embodied by NATO, but it would mean an acknowledgment of the fundamentally changed dynamics of the European order and the far more critical role of China within it.

Bringing about a negotiated end to the war in Ukraine may take some time and require more than just Beijing’s mediation. But even an end to the fighting in Ukraine in the form of a stable ceasefire could benefit China. Such an intermediate outcome would make it more likely, for example, that the Black Sea deal, which allows Ukraine to export its grain, would be extended again, easing the global food crisis.

A Black Sea Grain Initiative shipment at sea. Image: UNCTAD

This would consolidate China’s influence and leadership in the developing world, further cementing its status as an important power broker in the new bipolar order sketched out in a 2019 white paper China and the World in the New Era.

Building a new international order

While China’s more open engagement in mediation efforts to end the war in Ukraine could significantly advance Beijing’s vision of a new international order, it is not without risks for Xi.

As Zelensky noted in his call with Xi, the “territorial integrity of Ukraine must be restored within the 1991 borders.” Russia’s predictable reaction, delivered by foreign ministry spokeswoman Maria Zakharova, was to accuse Ukraine of linking its willingness to negotiate “with ultimatums containing … unrealistic demands.”

Ultimately, the question for Beijing, which has consistently affirmed its support for the international norms of sovereignty and territorial integrity, becomes whether it can find a way to square the circle between Moscow’s internationally isolated insistence that its illegal war and land grab in Ukraine be recognized and Kiev’s demand that its borders not be subject to change by force.

This is a fundamental question for European and global order, and since the 1975 Helsinki Final Act the inviolability of borders was the foundational principle of European security.

Whatever the fate of China’s mediation efforts in the war are, they will be a major test of the skill and leverage that Chinese diplomats have and they will be an indication of how China intends to play its future role in a re-imagined Eurasia.

Stefan Wolff is Professor of International Security, University of Birmingham and Tetyana Malyarenko is Professor of International Relations, Jean Monnet Professor of European Security, National University Odesa Law Academy

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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US and South Korea reach nuclear weapons deal

The United States and South Korea have unveiled an agreement under which leaders in Seoul will be handed an enhanced role in planning any nuclear response to a strike in the region by North Korea.

Announced at a state visit to Washington by South Korean President Yoon Suk Yeol on April 26, 2023, the so-called “Washington Declaration” will see US deployments of “strategic assets” around the Korean Peninsula, including an upcoming visit by a nuclear submarine. The last time the US had nuclear weapons in South Korea was in 1991.

Sung-Yoon Lee, an expert on U.S.-Korean relations at Tufts University, explains what the decision to revamp nuclear relations means and why it has come now.

What is in the ‘Washington Declaration’?

Well, there’s strong language. Whereas the U.S. has repeatedly “reaffirmed” its commitment in the past to the defense of South Korea, the wording in the Washington Declaration is more robust. It builds on the language contained in the joint statement released during Biden’s visit to Seoul soon after Yoon assumed office in May 2022.

On that occasion, the US pledged its “extended deterrence commitment to the Republic of Korea using the full range of US defense capabilities, including nuclear, conventional and missile defense capabilities.”

This time, lest there be doubt, that affirmation is made “in the strongest words possible.”

But what does that mean in real terms? First, the US “commits to make every effort to consult” with the Republic of Korea “on any possible nuclear weapons employment on the Korean Peninsula.”

More substantively, the two sides commit “to engage in deeper, cooperative decision-making on nuclear deterrence,” including through “enhanced dialogue and information sharing regarding growing nuclear threats” to South Korea.

It will come as a welcome development to decision-makers in South Korea, although it raises questions about just how much intel on North Korea’s threat and capabilities the US – and Japan, with its advanced signal intelligence systems – did not share with previous administrations in Seoul.

Second, the two allies will establish a new nuclear consultative group to “strengthen extended deterrence, discuss nuclear and strategic planning and manage” the growing threat posed by Pyongyang. This means Seoul now will have a seat at the table when it comes to planning any nuclear response strategy and in readying its “conventional support to US nuclear operations in a contingency.”

From right, US First Lady Jill Biden, US President Joe Biden, South Korean President Yoon Suk Yeol and, behind him, Kim Keon Hee, first lady of South Korea, attend a wreath-laying ceremony at the Korean War Memorial in Washington, DC, on Tuesday, April 25, 2023..Photo: EPA

In sum, Seoul will now have a much greater say in intel-sharing and planning for a joint long-term nuclear strategy, with a focus on its own role in any future flare-up in the Korean Peninsula.

It is a big step forward.

Why are the US and South Korea announcing this now?

The international security environment has drastically changed over the past year, necessitating credible countermeasures from the two allies, in cooperation with Japan. North Korea has fired well over 100 missiles since January 2022. Meanwhile, Russia’s invasion of Ukraine has only pulled China and North Korea closer into its sphere. And China has gone beyond its usual “wolf-warrior diplomacy” rhetoric by conducting threatening military drills around Taiwan last August and, again, this April.

The Washington Declaration comes on the 70th anniversary of the alliance between Washington and Seoul. The timing serves as an opportunity to reflect on and reassess the relationship. But, no doubt, the main drivers in this strongly worded reaffirmation of the alliance are the recent actions taken by the governments in Pyongyang, Moscow and Beijing.

How has South Korea’s position on nuclear options evolved?

The Korean Peninsula has been through two periods of actual “denuclearization” since the 1953 armistice that ended combat during the Korean War.

The first was in the 1970s when the US, catching wind of South Korea’s secret nuclear weapons program, threatened to withdraw all its troops from the South unless Seoul completely dismantled the program. And, so, the government abandoned its nuclear ambitions.

The second came in 1991 when the US and South Korea – perhaps anticipating the coming collapse of the Soviet empire and a severely debilitated North Korea – agreed to withdraw all US tactical nuclear weapons from the South, even as the North was working on its own nuclear program while vigorously talking “denuclearization.

But in recent years, public opinion in South Korea has strongly shifted toward self-nuclearization rather than reliance on the US stockpile off South Korea’s shores. North Korea’s relentless pursuit of more powerful nuclear and missile capabilities, starting with the resumption of ballistic missiles tests in May 2019 after an 18-month lull, has stiffened views in the South.

President Yoon himself floated the idea of self-nuclearization earlier this year. But the Washington Declaration appears to have tamped down such sentiment. In it, Yoon “reaffirmed” the Republic of Korea’s “longstanding commitment” to the Nuclear Nonproliferation Treaty, which would prevent the country from building up its own nuclear weapons stockpile.

How will the declaration affect regional tensions?

A staple of North Korean propaganda is that its arms program is a response to US “hostile policy” – which Pyongyang defines as anything from Washington raising concerns about the North’s egregious human rights record to the stationing of US troops in South Korea and joint US-South Korea military drills.

North Korea has launched more than 100 missiles since the beginning of 2022. Photo: KCNA

As such, it is reasonable to assume that Pyongyang will respond with a threatening act or two in the coming days. Using the Washington Declaration as cover, expect North Korea to embark on another brazen act of defiance.

Last December, Kim Yo Jong, the North Korean leader’s sister and deputy, threatened an intercontinental ballistic missile test on a normal trajectory, rather than the steep angle launches that avoid threatening nearby countries. And in 2017, North Korea’s former foreign minister Ri Yong Ho suggested that Kim Jong Un was considering testing a hydrogen bomb test over the Pacific. Either would represent a ratcheting up of North Korea’s provocations.

China, meanwhile, is likely to fall back on its decades-old mantra that issues on the Korean Peninsula need to be resolved “through dialogue” – a position that not only fails to penalize Pyongyang but indirectly empowers the isolationist state.

Sung-Yoon Lee is a professor in Korean studies at Tufts University.

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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China’s ambiguity deftly deepens EU splits on Ukraine

Much like Washington’s stance on Taiwan, China’s position on the invasion of Ukraine has been one of “strategic ambiguity.”

China has consistently emphasized the importance of sovereignty and territorial integrity while failing to condemn the invasion and reassuring Moscow of its “friendship without limits”.

So there has been serious concern in European capitals since Beijing’s ambassador to France, Lu Shaye, suggested that former Soviet Union countries “don’t have actual status in international law because there is no international agreement to materialize their sovereign status.”

Beijing quickly rolled back on this, insisting on Monday (April 24) that “China respects the status of the former Soviet republics as sovereign countries after the Soviet Union’s dissolution.”

Beijing also reiterated its commitment to facilitating a political settlement of the Ukraine crisis. China’s ambassador to the EU, Fu Cong, even used his interview with a Chinese news outlet to claim that his country’s cooperation with Europe was as endless as its ties with Russia were unlimited.

Chinese president, Xi Jinping, reportedly held a “long and meaningful” telephone call with Ukrainian president Volodymyr Zelensky – the first time the pair has spoken since Russian invaded more than a year ago.

Chinese state media reported that Xi told Zelensky China would not “add fuel to the fire” of the war but that peace talks were the “only way out” of the conflict, adding: “There is no winner in nuclear wars.”

Chinese President Xi Jinping and Ukrainian leader Volodymyr Zelensky are finally in touch by telephone. Image: Screengrab / NBC News

That EU-China relations have been deeply affected by the war is no secret. Recent visits by French President Emmanuel Macron, EU Commission President Ursula von der Leyen and German Foreign Minister Annalena Baerbock have left no doubt in this regard.

Yet, they also highlighted how diverse European approaches to China are and how they also affect transatlantic relations. While the Western coalition in support of Ukraine has so far held together, it also becomes ever clearer that it has been held together by US leadership economically, politically, and militarily.

This was also evident at the recent EU foreign affairs council meeting in Luxembourg. The bloc’s high representative for foreign affairs and security policy, Josep Borrell, had little new to offer on the EU’s three-track plan to provide Ukraine with one million rounds of artillery ammunition.

Most critically, and most disappointingly for Ukraine, proposals on how to increase European defense production capacity have yet to be finalized.

Similarly, a new EU sanctions package against Russia is unlikely to be concluded until later in May. And the EU and Japan have pushed back against a US plan for the G7 countries to ban all exports to Russia.

All this adds to the question marks already raised about the prospects for a successful Ukrainian counteroffensive in leaked US intelligence assessments.

West divided

It also indicates a continuing and deep uncertainty – and division – in the west over whether, how and what to negotiate with Russia.

On the one hand, there are those who urge the West to double down and dramatically increase its military support for Ukraine. Others advocate for a new strategy that will move the contest from the battlefield to the negotiation table.

Both approaches have their own inner logic. Both want to avoid a prolonged, damaging stalemate on the battlefield.

Such a stalemate would not just impose further costs on Moscow and Kiev but also have repercussions far beyond the frontlines in Ukraine. Former Russian president Dmitry Medvedev has already threatened to end the current deal that enables Ukrainian grain exports via the Black Sea.

This constitutes a vital food supply line for many developing countries. If Russia were to pull the plug on the deal, this would also further increase tensions within the EU over transit (and market access) for Ukrainian grain.

Little wonder then that countries like Brazil are keen to see China try its hand at mediating between Russia and Ukraine.

French fears

For the Chinese president, Xi Jinping, clearly more important than Brazil’s support is that of his French counterpart. Macron is allegedly working with China on creating a framework for Russian-Ukrainian negotiations.

However, he has been widely condemned for doing so. Only the Italian defense minister, Guido Croscetto, has seconded the idea that China should be mediating peace talks.

Macron has a track record of, if not openly pushing for negotiations, at least considering ways of establishing credible pathways that can get them started.

In June last year, he was widely criticized for suggesting that Russia should not be humiliated. In December last year, he proposed security guarantees for Moscow, an idea that was similarly ridiculed by Ukraine and other Western allies.

China’s President Xi Jinping, his French counterpart Emmanuel Macron and European Commission President Ursula von de Leyen meet for a working session in Beijing, China April 6, 2023. Photo: Ludovic Marin / Pool

The fact that France remains committed to the need for negotiations, and outspokenly so, however, should not simplistically be seen as a rush to concessions towards Moscow.

It is, in part at least, also a reflection of the very real difficulties that lie ahead on a potential path to a military victory in Ukraine. These difficulties are to some extent of the West’s own making, especially the EU’s own woeful lack of defense capabilities.

But the French position also reflects a fear of further escalation of the war with Russia, as foreshadowed in Russian foreign minister Sergey Lavrov’s recent speech at the UN Security Council and of an irreversible deterioration of relations with China.

The flurry of European visits to China over the past six months, beginning with German chancellor Olaf Scholz last November, is an indication of how important that relationship is for the EU and its key member states. And that France is not alone in seeking an end to the war in Ukraine sooner at the negotiation table rather than later on the battlefield.

The EU’s inability to make decisive commitments to bolstering Ukraine’s capabilities to win – and curbing Russia’s – is a symptom of a wider contest over what Europe’s vision of the future of international order is and what role it wants to play in it.

By default or design, the outcome of this contest will also decide the fate of Ukraine.

Stefan Wolff is Professor of International Security, University of Birmingham

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Singapore announces new property cooling measures, additional buyer’s stamp duty doubled to 60% for foreigners

8. For acquisitions made jointly by two or more parties of different profiles, the highest applicable ABSD rate will apply.

9. Married couples with at least one Singapore citizen spouse, who jointly purchase a second residential property, can continue to apply for a refund of ABSD, subject to conditions. These conditions include selling their first residential property within 6 months after (a) the date of purchase of the second residential property if this is a completed property, or (b) the issue date of the Temporary Occupation Permit (TOP) or Certificate of Statutory Completion (CSC) of the second residential property, whichever is earlier, if the second property is not completed at the time of purchase.

10. The ABSD currently does not affect those buying an HDB flat or executive condominium unit from housing developers with an upfront remission, if any of the joint acquirers/purchasers is a Singapore citizen. There will be no change to this policy.

11. The revised ABSD rates will apply to all residential properties acquired on or after Apr 27, 2023. There will be a transitional provision, where the ABSD rates on or before Apr 26, 2023 will apply for cases that meet all the conditions below:

a. The Option to Purchase (OTP) was granted by sellers to potential buyers on or before Apr 26, 2023;

b. This OTP is exercised on or before May 17, 2023, or within the OTP validity period, whichever is earlier; and

c. This OTP has not been varied on or after Apr 27, 2023.

12. Correspondingly, the Additional Conveyance Duties for Buyers (ACDB), which applies to qualifying acquisitions of equity interest in property holding entities (PHEs)6 will be raised from up to 46 per cent to up to 71 per cent.

Significant Increases in Housing Supply

13. The revisions to the ABSD rates to help moderate investment demand will complement our efforts to ramp up supply, to alleviate the tight housing market for both owner-occupation and rental.

14. We have increased the supply of private housing on the Confirmed List to 4,100 units for the 1H2023 Government Land Sales (GLS) programme, from 3,500 units for 2H2022. In 2022, we had injected a total of 6,300 units under the Confirmed List. For public housing, we have launched more than 23,000 flats in 2022 and will launch up to 23,000 flats in 2023. We are also prepared to launch up to 100,000 new flats in total between 2021 to 2025. We will continue to maintain a steady pipeline, to cater to growing housing demand. 

15. While COVID-19 had led to severe delays across private and public housing projects, we have made good progress to get back on track. With almost 40,000 public and private residential property completions in 2023, and near 100,000 units expected to be completed from 2023 to 2025, there will be significant housing supply coming onstream over the next few years.

16. The measures above have been calibrated to moderate housing demand while prioritising owner-occupation, and provide sufficient housing supply. The Government will continue to adjust our policies as necessary to ensure that they remain relevant, and promote a sustainable property market.

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Pentagon suggests China seeks to seize US satellites

The recent leak of Pentagon documents included the suggestion that China is developing sophisticated cyber attacks for the purpose of disrupting military communication satellites. While this is unconfirmed, it is certainly possible, as many sovereign nations and private companies have considered how to protect from signal interference.

Nearly every aspect of our lives is enabled by satellite communication, from financial transactions, navigation, weather prediction, and internet services to more remote locations. Yet given how many satellites are in orbit, while the effect might be felt on some of the population, if a satellite or two were lost there would not be any major problems.

But when we consider the military benefits of satellites, immediate communication is vital for early warning systems and tracking. So how easy would it be to disrupt these services?

The Chinese space program has been advancing at a faster rate than that of any other country. China’s first successful launch was in 1970, but in 1999 its space program leapt forward with the Shenzhou-1 launch which was the first in a series of unmanned, then manned, space missions of increasing sophistication.

China conducted just over 200 launches between 2010 and 2019. In 2022, it set a record with 53 rocket launches in a year – with an incredible 100% success rate.

As such, the Chinese National Space Administration (CNSA) has become a major player in global space activity and has a lot of experience with satellite communications.

Satellites would be a target in any US-China conflict. Image: Twitter

The leaked document suggests that the Chinese are looking for the capability to “seize control of a satellite, rendering it ineffective to support communications, weapons, or intelligence, surveillance, and reconnaissance systems.”

It’s also quite possible that the US and other nations might also be developing such capabilities.

Satellites orbit our planet at a range of altitudes. The lowest stable orbits are around 300 kilometers, the International Space Station and the Hubble Space Telescope sit at 500 kilometers altitude, and geostationary satellites are around 36,000 kilometers up (about six times the radius of the Earth).

The idea of physically capturing or taking over a satellite has been considered a largely impossible task, although it has featured, famously, in the film such as “You Only Live Twice” where a large orbiting cylinder swallowed manned spacecraft.

Smaller craft designed to remove space debris from orbit have been launched in the past few years. But the practical challenges of capturing a fully working and operating satellite are far greater (particularly due to the recoil of firing harpoons).

However, there are methods of disrupting and even taking over satellite communication?

Three ways to disrupt satellite communications

1. Saturation

This is the easiest method. Satellites communicate by broadcasting on a specific set of radio or microwave frequencies. By bombarding the receiving station or the satellite itself you can effectively drown out the signal. It is particularly effective with positioning information.

2. Jamming

This is a method of diverting the communication signal from reaching the satellite or the ground control station. This requires high-power signals to fool one or the other that the jamming signal is the main transmitting station as a communication will lock onto the strongest source.

This method of interference works best when the jamming signal contains no information, so the receiver assumes there is no data transmission (a human would hear silence or just a tone).

3. Command sending

This is an infinitely more tricky procedure. The original signal needs to be silenced or overpowered and the replacement signal must be able to accurately communicate and fool a satellite.

This usually requires knowing an encryption key that would be used as well as the correct commands and syntax. This sort of information cannot be easily guessed, meaning knowledge of the launch systems and companies is required.

To make these three techniques easier to understand, imagine you are at a restaurant and your partner is sitting opposite you. You are talking to them normally and then the background music gets turned up really loud. You may be able to make out some words but not everything – this would be saturation.

Now the waiter comes past and starts talking loudly at you taking your attention away – this would be jamming.

Now your partner goes to the toilet and you receive a call that appears to be from them but is actually from somebody who has taken their phone and is impersonating them – this would be command sending.

This final example is infinitely more difficult to achieve but has the most potential for disruption. If you can trick a satellite into thinking you are the true command source, then not only are communications blocked but false information and images can be sent to the ground stations.

Zombie satellites

When a satellite does go out of communication, we refer to it as a zombie satellite. Essentially it cannot do any of its intended tasks and just orbits with little chance of recovery.

This can happen naturally during coronal mass ejections, when the Sun releases large amounts of energetic charged particles that can interact with satellites causing electrical surges. In some cases, this results in untrustworthy data, but can also result in communication loss.

Destructive anti-satellite missile tests generate huge amounts of space debris that can endanger other satellites and manned spacecraft. Photo: Atalayar

The most famous of these cases was the Galaxy 15 telecommunications satellite, which lost ground station communication in 2010 but continued to broadcast communications to customers.

While the military cannot replicate coronal mass ejections, the hijacking of signals is possible. The leaked document does not provide any proof of China’s capabilities, or indeed the United States’ current advancement in this field.

All we can say is that our understanding of atmospheric physics and wave propagation in the upper atmosphere is likely to increase rapidly as this becomes more and more important.

Ian Whittaker is Senior Lecturer in Physics, Nottingham Trent University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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